GST Council meet: Lower tax for medical oxygen, concentrators likely; vaccines may not get exemption

The forty third assembly of the GST Council that began at 11 am is more likely to see discussions and resolution on some crucial points like compensation to states, GST on vaccines and tax discount/exemption for Covid medication and different medical tools.

Sources indicated that the demand for zero tax on vaccines may not be honoured as the vast majority of home manufacturing is procured by Centre and state governments. However, a discount in GST on crucial requirements for extraordinary sufferers like medical oxygen, concentrators and pulse oximeters is very seemingly.

forty third GST Council assembly underway.

The assembly is predicted to witness turbulence as there could possibly be a distinction of opinions on a number of issues between the Centre and Opposition-ruled states. One of them could possibly be the extension of the compensation interval that many states have demanded in the run-up to the meeting.


The proposal by some state to exempt GST for Covid vaccines is more likely to be one of many greatest points that each one be mentioned within the assembly. Several political events and well being consultants have demanded a full GST waiver on vaccines. At the second, vaccines appeal to a 5 per cent GST.

Read | Exempting Covid vaccine from GST would be counterproductive: FM Sitharaman

There are two methods to deal with the demand for no tax — one by means of the “zero-rating” route and the second exemption from tax. Declaring vaccines below the ‘zero rated’ class would require a change to the legislation as solely Special Economic Zone items take pleasure in the advantages as of now.

The different route is by exempting vaccines from taxation. But sources informed India Today TV that the Fitment Committee of the Council — which scrutinises tax proposals — is not in favour of exempting the minimal GST of 5 per cent on vaccines. In its report, the committee stated Covid-19 vaccines may proceed at a 5 per cent fee.

The committee backs its suggestion with the next arguments:

A) The GST fee for vaccines is already within the lowest slab. Since the vaccines produced in India are being fully procured by the Centre and States and many of the procured vaccines are being supplied free, the tax earned would finally accrue to the states and Centre.

B) The full exemption from GST can be detrimental to the curiosity of home vaccine producers as such a transfer would enhance their price of manufacturing. The Committee clarifies that when the vaccines are exempted, the producers below the present rule would not be eligible to assert the enter tax credit score and their working capital would get caught.


While vaccines may not be exempted from minimal tax below the oblique taxation legislation, the GST Council is more likely to announce a tax discount for key medical items together with oxygen and oxygen concentrators.

It may be famous that opposition-ruled states are anticipated to push for an entire exemption or a zero-rated system for GST on all Covid-related supplies. Finance ministers of a number of states have demanded the zero-rating for Covid-related medical tools and medicines, arguing that unprecedented instances want out-of-the-box measures.

Also Read | FM Nirmala Sitharaman to chair 43rd GST Council meeting today: All you need to know

However, India Today TV has learnt that the Council is more likely to take up a proposal to decrease GST solely for a restricted interval on items equivalent to medical grade oxygen, oxygen concentrators, pulse oximeters, together with private import, and Covid testing kits.

The agenda circulated for the GST council assembly additionally proposed no change in fee for PPE kits, N95 masks, hand sanitisers, thermometers, uncooked supplies for Covid testing kits and different objects.

The Fitment committee is not in favour of tinkering with the tax on medication and medicines. It means that the 2 objects fall below the 5-12 per cent tax class, including that the Covid protocols and therapy preserve altering.

Watch | ‘GST on crucial Covid medicines is insensitive and cruel’ : Congress

“Till a few days ago, remdesivir was a sought after drug. Now, WHO has ruled that it’s not part of Covid-19 treatment protocol. That’s why the Fitment committee feels levy on drugs should be based on recommendations from Ministry of Health and Family Welfare,” the committee stated.

The following are the proposals drawn up by the Fitment Committee of the GST council for medical tools and necessities

ITEM Current Rate Proposed Rate
Medical Oxygen 12% 5% Till July 31, 2021
Oxygen Concentrator 12% 5% Till July 31, 2021
Pulse Oximeter 12% 5% Till July 31, 2021
Covid check kits 12% 5% Till August 31, 2021
PPE Kits/N95/3 layer masks 5% No change
Ventilators 12% No change
Covid medication, vaccines and medicines 5-12% No change


The Fitment committee in its proposals accessed by India Today TV cautions that the aid ought to be supplied solely by means of fee discount and there ought to be no upfront exemption — because it impacts home manufacturing adversely — and any aid ought to be given solely for crucial objects procured by sufferers.

Also Read | Exempt GST on life-saving drugs, reduce Covid-19 vaccination age to 25 years: Congress


At at this time’s assembly, the Centre can be anticipated to face a united group of finance ministers from opposition-rules states on the issue of revenue shortfall and how will they be compensated.

Sources point out that call on borrowing mechanism may be taken to fulfill the income shortfall. Last 12 months the difficulty had created an enormous rift within the GST council and compelled the Centre to facilitate borrowing of round Rs 1.1 lakh crore on behalf of states.

In the present fiscal, the overall income shortfall estimated at round Rs 2.7 lakh crore and the Centre may have to help states with borrowings past Rs 1.5 lakh crore. For this, the Centre may must once more depend upon the Reserve Bank of India (RBI).

Also Read | States may seek 5-year extension GST compensation in upcoming meet: Report

The different large concern of dialogue is the supply within the GST legislation that states can be eligible for 14 per cent income progress yearly, relying on which the income shortfall shall be computed accordingly.

The GST legislation had supplied a mechanism to compensate states for a interval of 5 years, ending July 2022. The compensation scheme was supplied to cushion states’ income losses because of the implementation of GST in July 2017.

States now need the supply of compensation to be prolonged additional. However, the Centre is worried that the 14 per cent escalation fee is simply too excessive and may look to cut back it.

However, given the strained funds of states, a straightforward consensus is unlikely. In at this time’s assembly, at the very least seven opposition-ruled states are anticipated to kind a united entrance to push for an extension of the compensation interval.

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